Tuesday, January 18, 2011

Brown's budget proposal may have disparate impact on California's rural counties

When Jerry Brown returned to Sacramento as Governor of California, he brought with him a promise of a tough new budget, calling it “a tough budget for tough times.” The proposed budget has caused some rural counties to wonder, “Was that a promise or a threat?”

According to Brown, the budget will require sacrifice from every sector of the state. The budget proposal is seeking $12.5 billion in cuts, and perhaps more importantly, a historic realignment of state services. Many rural jurisdictions including Humboldt County are fearful that this realignment could have a disparate impact on their local agencies.

Humboldt County Administrative Officer Phillip Smith-Hanes elaborated on the potential realignment of services, saying that health and human services will have the biggest hits, followed by further reductions to In-Home Supportive Services. Another important aspect of funding that will disparately impact rural counties is the elimination of the Williamson Act payments for the current fiscal year.

Under the Williamson Act owners of farm and ranch land can sign a contract in which they agree to keep their land undeveloped in exchange for a break on local property taxes. The loss in local revenue was traditionally reimbursed by the state. Under the new proposals counties will receive a lump sum of funding and it will be up to the counties to delegate the money to their agencies as they see fit. That is they can fund what is most important to their residents, and underfund or not fund at all programs that are deemed less important. This shift in responsibility may leave rural counties with a serious disadvantage. Smaller areas may have less capacity for raising funds locally, and many may not have enough experience or sophistication to properly handle the distribution of state funds.

Smith-Hanes said he's also concerned about Brown's call to realign fire services, with Brown saying that with increased urbanization, fire responsibility should fall to local jurisdictions rather than the state. ”That would be lovely if we're talking about San Diego County, but much different if we're talking about Humboldt County because we don't want the state dumping a bunch of fire responsibilities up here,” he said. Many rural counties have a higher proportion of the state’s forests and thus a higher proportion of fires. In addition, in places like Humboldt County working on a fire crew is one of the few good jobs many residents are qualified for. Smith-Hanes added, “The reality is there are places in the state like Lake and Humboldt counties that won't be able to fund their services to the same extent as Napa or Marin. That's one of the challenges we at the Legislature will have to grapple with.”

While these changes may help at the state level, it also can create cash flow issues at the local level, by reducing jobs and lowering salaries of those working for county agencies and in education. In rural places like Humboldt County these are often the only decent paying jobs for the educated and uneducated alike. It is yet to be seen if the budget proposal will be adopted by the legislature, but rural counties have reason to be apprehensive.


RH said...

From what I understand California has just papered over its debt by selling bonds for many years, which has probably made the reckoning that we're seeing now even more painful. I guess it's good that Brown is finally coming to terms with the severity of the problem. Hopefully the pain ends up being worth it. Most economists seem to be saying we need to spend more in order to stimulate the economy. It seems like rural areas would have an even harder time then because their economies would be slower to recover. So, they would actually need more help from the state government rather than less, but it doesn't look like they're going to get it.

robs24 said...

Great blog post. Another big problem for the rural communities is Gov Brown's plan to take away redevelopment funds. For much of California (especially urban), I think these cuts are going to greatly improve the state budget, but the loss of redevelopment funds will be disastrous for places like rural Lake County. Lake County (25% poverty rate, 18+% unemployment), has little property tax or sales tax revenue and the city of Clearlake is on the brink of becoming a failed city. Brown held a "discussion" at the capitol this week on the subject and a member of the Clearlake City Council attended. Brown says the redevelopment cuts have enabled him to continue to fund some education programs. Brown, a typical and experienced politician, did have a good rebuttal, but the consequences will include more poverty and more meth. Rural economies have been hit hard by the recession and the future continues to look bleak.